Despite Croatia’s high homeownership rate, only an estimated 20-25% of properties are insured, while rising rebuilding costs and increasingly severe climate-related risks are widening the protection gap and increasing the risk of underinsurance, according to Croatia osiguranje.

Bojan Letica, Director of Product Development and Underwriting at Croatia osiguranje, pointed out that the level of property insurance remains significantly below that of more developed European markets. Fire insurance penetration, for example, exceeds 75% in countries such as Germany, Belgium and the Netherlands.

According to Letica, underinsurance is one of the largest yet least recognized problems in property insurance. Rising construction, material and labor costs mean that policies taken out several years ago may no longer provide sufficient coverage for rebuilding or repairing a property. Complete lack of insurance remains an even greater concern, particularly for coastal apartments and villas exposed to wildfires, storms and other weather-related risks.

Although premiums for fire and natural hazards insurance increased from EUR 146.1 million in 2024 to EUR 160.9 million in 2025, this does not necessarily indicate significantly higher insurance penetration. Over the same period, Croatia’s official benchmark construction cost increased by about 10%, from EUR 1,195 to EUR 1,315 per square meter. Thus, much of the premium growth may simply reflect higher rebuilding costs rather than an increase in the number of insured properties.

The changing climate risk landscape is adding to the challenge. Wildfires, severe storms, hail and flash floods have become more frequent and intense, while risks are increasingly less confined to traditionally exposed regions. This makes broader multi-risk property coverage increasingly relevant for Croatian households.

Letica also stressed the importance of periodically reviewing sums insured and adjusting them to current reconstruction costs, particularly after renovations or investments that increase a property’s value. Indexation mechanisms can help prevent insurance coverage from falling behind rising construction costs.

While major natural disasters temporarily increase demand for property insurance, the effect tends to fade over time. Letica believes insurance should increasingly be viewed as a tool for household financial resilience rather than an additional expense, particularly as property values, rebuilding costs and climate-related risks continue to rise.

Source: osiguranje.hr